THE BEARS"Wishful thinking plays a huge role in the...

STOCK WATCH ^

December 04, 1991|By Advice to help investors decide whether it is time to buy or sell. Compiled by Steve Halperm for Knight Ridder.

THE BEARS

"Wishful thinking plays a huge role in the outlooks of many investors," says Geraldine Weiss of Investment Quality Trends, La Jolla, Calif.

"Still, this has little to do with stock prices. The nation has been and still is in the midst of a severe economic recession.

"It is inconceivable that the nation can endure a recession of such magnitude without this being reflected in stock prices.

"Historically reliable measures continue to warn that the Dow is in the area of a major top."

"You're portfolio is at risk, so act now," says Adrian Day of Investment Analyst in Baltimore.

"The dollar has collapsed, stocks have tumbled, and even the bond market is taking some big hits. A deteriorating economy and the threat of inflation are a terrible combination, particularly in light of the fact that real interest rates are already low by historical standards.

"Cut back on your stock holdings, using rallies to sell. We believe we've already seen the top to this bull market."

THE BULLS

"Despite the market's sharp setback, the basic trend is still intact and we believe that recent highs will be tested," says Standard & Poor's The Outlook of New York.

"While recent action does not bode well for the short term, longer-term prospects are brighter. Low inflation remains a positive market force. The anemic interest rate environment has made stocks an attractive alternative. Although stock valuations remain relatively high, we continue to recommend that equities make up 60 percent of investment portfolios."

"Despite the market's decline, the Dow still remains inside the 200-point trading range that dates from February," says William LeFevre of Monday Morning Market Memo.

"We like to think the current volatility can be contained above 2850. Although short-term volatility can be expected, we continue to hold our positive stance toward the stock market. We think the downtrend will end soon, and investors who have the courage of their convictions should consider using this period of market uncertainty as a buying opportunity."

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